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tv   Asia Edge  Bloomberg  April 27, 2014 11:00pm-12:01am EDT

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for the philippines and the final stage of his tour. we are going to assess the highs and lows of his trip so far. the imf releases its latest for asia. also is optimism but concerns. we are going to take a look at the four major risks facing this part of the world. to makeunced push offerings missed the mark. i am watching the market for all of you as we kick off a new trading week. at, is what we are looking fairly mixed but not exactly a day for the bulls to put their hat on. you're looking at the third day of losses across the region. three main themes today. we have tensions in ukraine and russia getting the best of risk appetite.
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they are keeping money in safe haven assets like the yen and gold. to president obama's trip the region. he wraps things up. disappointingre for the chinese corporate with the exception of the banks ironically. i will be back with more details. concerns for china's top banks managing to boost a profit. look at the details. what have we got behind this? >> we have double-digit profit increases in the first quarter. the biggest profit increase in the year. these banks are reporting wider at lending margins in the quarter. this is curious given there is so much exposure on bad loans, the fact that bad debts are rising. they are setting aside more money to deal with it. china construction bank is up
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10%. at atock is trading lower moment in hong kong. lower ins are trending general today. the agricultural bank of china also out with results. it is benefiting permits largely rural customer base buffeting asset quality. oft actually match tank china, which reported 14% gain in first-quarter profit as well. icbc is due tomorrow. >> what do we have on the ?orizon for these companies everybody says it is going to get worse before it gets better. a half percent growth. >> it is an enviable pace from the western world's if, but it is a massive economy. 1.2 billion people. a you jim out of profits relied
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on the shadow banking system. a huge amount of profit relied on the shadow banking system. the people's bank of china looking to implement reforms. also the fact that you have the -- the former adviser. he says there needs to be of funds to ensure an orderly wind down of bad loans. the banks have significant exposure. billions ifng about not trillions of dollars. there's a lot at stake. radical innot as their views. it's a growing challenge. david. weet back to will have a look at what is happening market wise overall. >> we are looking at eight shares.
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big one reports tomorrow. icbc. we are just seeing gains. there is an accounting impact here. you recognizewhen if a loan goes back. it also depends on when they actually choose to provision for bad loans for the future. farre looking at lending so offsetting any provision for the future. it's obviously a longer-term story. across at bank and construction bank. icbc reports tomorrow. we are up 4/10 of one percent for agbank. icbc unchanged for now. this is where when people see valuations are depressed you shares just about
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book value if not under. >> one of the largest eels in the pharma industry may be back on the agenda. people familiar with the matter says pfizer lance to renew talks to buy astrazeneca. these people say pfizer made -- plans to renew talks to buy astrazeneca. astrazeneca has a market value of 86 lien dollars. president obama is on his way to manila in the final leg of his asian tour. andft kuala lumpur, there may be protests in store. part of his agenda is closer military ties and a deal to placed.s. troops to be temporarily in the philippines to counter china's rising influence. toyota is reorganizing its infrastructure. there is no telling how many jobs will be lost. they're
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relocating to dallas. they currently employ more than 5000 people. they are going to be informed of the plan later today. workers have been given a range of options, including what is being described as a voluntary exit program. a chinese factory that supplies nike and adidas is over. thousands of workers walked out over pay and conditions last week. the company says operations are back to normal today. the you input the cost of the nispute at $27 million -- the u puts the cost of the dispute at 27 million dollars. toyota said to be relocating its u.s. sales headquarters from california to texas, and jobs could be on the line. rival honda is also making headlines with forecast that
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mia has been watching those stories. >> let me put some context around the toyota story. i weaned for texas. for texas. relocate 5300o workers to the dallas suburbs. it's unusual because the toyota everyone knows is the number one auto manufacturing industry in the united states. second would be southern california, not necessarily when it comes to large-scale manufacturing operations but definitely when it comes to companies like toyota, kia, mazda, mitsubishi having their hr headquartered in this area. one of the reasons many say this is moving is because of the tax breaks when it comes to corporate and when it comes to personal income an individual
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would make. of course rick perry, the governor of texas, has been very vocal in the past year and a half in encouraging more california companies to move to texas because of these varied regions. one of the questions that will always surface when something like this happens is the retention issue. honda also making news as well. forecasting a profit that missed estimates. on march,ths and 2015. they come in at $5.81 billion. that. ks for we are going to get a driving legend from one of gm's legendary engineers. coming up, find out why our next thet is keeping an eye on situation in ukraine and getting ready to act. we are back after this short break.
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>> the imf has just released its asia outlook. to the regional director about the key take away. >> it will remain the most dynamic region in the world. we forecast the growth rate will be 5.4% this year and five percent this year. >> how will china factor into this? to welcome a have slight slowdown of chinese earnings. i think this is a desirable adjust rent -- adjustment. 7.3% thisecasting year. although it is significantly , and china has focused more
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on quality of growth. in terms of growth 7.5% is a healthy growth rate. >> we are awaiting the finalization of the transpacific partnership. negotiations are still ongoing. what do you think this measure is going to mean for asia? the longer it delays what impact is that going to have? growth market of asia has been exports. trade is notee moving very rapidly. i think regional free trade is the second best. goes verythat it well. it's not an easy goal to
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achieve, but i hope policymakers understand that more trade can be an engine. >> structural reform not only in japan but broadly in asia. how significant is structural reform? >> let's make it simple. people talk about structural reform. you look at indonesia and india, actually people look at ,hether growth will go down without having a structural they cannot do the trend. >> as you start looking at asean for example and the higher rate of integration we are starting to see along with gdp and the rest, what are the positives and negatives as an outcome? we are more integrated. it
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gives more opportunity to grow. on the other hand are cycles are more synchronized. in investments they have an important role. subject toountry is it, helping each other will become more and more difficult. imf will be the more important. >> the safety net, how important is it for asian economies to know it's there? this is a very controversial issue and a sensitive issue. 1997 financial crisis asian countries do not ask for help from the imf. crisis, imf
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to theed lending precautionary measures to prevent the crisis. many other latin american countries are relying on the facilities. this they will tend to avoid stigma from asia. it may take time. the imf is working on this issue. >> the european union and the u.s. want to ratchet up sanctions on russia. they will be talking to vladimir putin's inner circle. latest inre with the the saga. >> breaking news. there is nothing right now. the reports are suggesting they russiangeting 15
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officials, his cronies. they may look to impose travel bans. that's the idea going forward. it would be the u.s. because european union law cannot do that. the white house security adviser is going to announce that monday. the eu will announce as well. different sanctions because different laws apply. with leaders from the u.k., italy. they agreed on this. got sanctions. they are going to ratchet it up and see how russia reacts. so far they target the inner circle. thehey were talking to european secretary about $16 billion in assets. >> i am sure they are already
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talking about this. time eight were already -- were actually captured. one has been released. the swedish monitor was released because of medical conditions. there has not been any violence, but that is a concern going forward. that.nks for >> our next guest says if the political conflict escalates he assetpared to change his allocation. joining us is the managing director and head of fixed-income at citi investment management. at what point are you going to do that? things have turned pretty south. how far south does it have to go for you to switch things around? >> perhaps we will get a sense
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of that later today when the sanctions from the united states and europe are published. focused in the sand is more on the export of energy from russia to western europe, and clearly that would have a profound and negative affect on the fortunes of both. there is a form of mutually assured destruction at work, which is possibly one of the reasons the markets have been reasonably sanguine about this crisis to date. the main benchmarks are only off one percent or two percent. should that deteriorate, and last time i was having this conversation i did warn it was a big risk of escalation. should the situation deteriorate we will have to look closely at allocations to date and in particular to the equity markets. >> let's put in areas scenarios. -- various scenarios. talks have to be held. perhaps the assurance from the west should be that ukraine may
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not join nato but can remain pro-western. day is at the end of the something that is palatable to putin. >> that is the type of line being delivered particularly from western leaders at the moment. whether or not that has any resonance and appeal to putin i think are two different things. remember that putin is communicating to a domestic audience. it is in the ukraine as well. >> quite possibly. the couple getting factor is a large proportion of people in the eastern ukraine also believe the same thing, which makes it a complex situation. a line in the sand has to be drawn at some point unless some claims start to widen across europe, sof eastern i think this balance is what we're going to see from this list published later today. >> you have got ukraine facing $9 million in debt repayment
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this year. he doesn't have the cash to do it. imf says it is going to dole out 7 billion, and the rest of the nation is going to kick in the rest. how optimistic are you that the ukrainians can get their finances in order? >> we have seen these yet default risks before. we have seen packages bailout programs which have been in place and particularly when the support from western donors tend to be a reasonably well-managed exercise. i think that frankly is the case. all eyes clearly are on the ability and willingness of russia to maintain energy supplies into western europe without the risk of a backlash impacting things like the bailout. >> you have 90 billion -- $60 billion already out of russia. we have a credit downgrade as well. on. will he is actually do anything about it? >> i think if you were looking
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at this from altitude you would say the balance of leverage does rest with the west at this point in time. central bank in russia do have an entrance and target that exceeded. bond yields are being jacked up higher. the country is close to a recession. any further threat to that, particularly the energy supplies would have a difficult affect. >> we're going to get more from john on the show when he is going to join in our conversations. coming up next. >> more. quite the latest on the south korean ferry disaster when we return. you are watching "asia edge." ♪
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>> let's have a look at some of the stories making headlines around the world. four crew members of the ferry have entertained. 11 other crew members including the captain had been formally arrested, accused of negligence and abandoning people in need. there are also implications it was carrying far more cargo than it should have. 300 people dead or missing. the search for the remaining victims continues.
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,10 still unaccounted for although officials say the passenger list could be inaccurate. >> time for a heads-up on some of the stories we are going to be tracking. a turning point for taking one of china's largest tech companies public. on tuesday we are expecting ali baba to file in the u.s. we are going to be watching airlines on wednesday. specifically japan air and ana reporting results. high crude may weigh on the carriers. may tumble by as much as 50%. also on wednesday, a big day. the lineup for this seasons could behip league
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confirmed. it could be the first. ico facinghlet chelsea. it could be an all madrid final on may 24. and to the state of macau, we are going to get april revenue on friday. they were jumping 50%. >> after the break business in tokyo as they digest their lunch. japan has been leading equity markets across the asia-pacific. a loss of just over one percent in the morning session. a recovery this afternoon? the reopening is next. ♪
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his to thed philippines with plans for a stronger military alliance. where stocks are rising that ipos are a tough sell. the issue with vietnam. and the oedipus complex, building the tallest tower in the world. so first, let's build on things with markets now. >> investors will be wishing for the --to be as high as
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it wasn't a pretty morning session here. stocks were the gainers out of the 225. for that yield on the 10-year jp be. for the carmakers, bit of a mixture. marketsaction from the and some other stocks are positing. capital structure for the jicama koman. for kiko olympus starting their
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deliberations, whether or not it would make sense for the company perhaps going forward not to merge itself. --are looking at a time tale a timetable, maybe april next year. pictureems the overall is one of risk aversion given the tensions in ukraine. what is happening in terms of commodities? >> that's right. with a look at the equity space, volumes are quite nice. gold right now has two or three dollars announce. are now seeing a little bit of dollar strength despite the fact that the yen is holding a two-week high.
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nymex is now at 101. still some room to go before we get back to the highs two weeks back. aoking at brent crude, about .25%, holding above 109 for the month of april. 4.65.l gas, i want to quickly mention before i forget, take a look at the graph, crude oil, i bit have enough transforming line here. up trending line here. >> this is a visit of great significance, isn't it? >> yep.
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beenu know how long it's since the last time an american president visited malaysia? almost 50 years. so this visit is significant. it comes at a time when the transpacific trade accord, the tpp, is being negotiated. it is crucial that obama get support from malaysia as some consider as a swing state. malaysia has more outstanding tpp issues than other countries in the talks. while in malaysia, the american thatdent reassured allies the u.s. will carry through its obligations. it also sent out a note to portion. >> we don't seek on select. we seek to keep the peace. we want a future where disputes are resolved peacefully and we're -- and where bigger nations don't bully smaller nations. all nations are equal in the eyes of international law. >> has we've been saying here as well, the president is on his
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way to the philippines. what is on his agenda there? it seems security, front and center. >> definitely security. obama heads to the philippines with plans for a stronger military alliance. be achieved to their cap the expectation that the two countries will sign an bigs -- an agreement to counter the china dispute in the south china sea. is tree-bound to defend the philippines. here's what the finance minister has to say. >> needs to make sure that it is able to monitor its area of responsibility. lately, the president has decided to improve that capacity of our forces to have awareness of what is going on in the area
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of responsibility. area think that will be an of mutual interest between the philippines and the u.s.. questions about the u.s. pivot to asian, where the u.s. remains committed, obama says yes, but it remains to see if asia has been convinced by his commitment. >> thanks for that. >> stocks in vietnam are on a run, reaching multiyear highs in march. but the ipo market is in a slump. let's get more from that store it. why has vietnam's offerings n so short? >> the numbers are dramatic. they have only managed to raise
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35% of the $185 million that they went out to. so very low numbers. analysts say it is not surprising at all given that many of these company's felt pressured to do the ipo process. but at the end of the day, they are not very well prepared and have done a horrible job of company -- horrible job of marketing. a hanoi-based company, before the ipo last month, date didn't hold a single investor meeting and they did not even bother putting up a website. a month later, they still don't have a website. that is a typical experience that accounts for the very low target we are seeing. the ipo process in vietnam is rudimentary. they simply register with one of the stock exchanges and then hold an ipo through the auction process. that might be another reason why the market has not been very
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sophisticated with these ipos. >> putting the cart before the horse. why is there such a rush to ipo? recognizesrnment that they really need to reform the soe's. it's a really big piece of for vietnam. they have put an aggressive plan for fixing sales of 132 companies by the end of next year. so a lot of these companies feel an immense pressure to really get these initial offerings happening. but unfortunately, a lot of them don't feel very motivated or the structure is not there to make sure that these ipos are successful. the ipos do take up a lot -- the state companies do take up a lot of state resources and capital and do account for a lot of the bad debt that the banks are now burdened with. so a lot of pressure to get them
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to sell shares. of excitementt for vietnam equities last year, a lot of foreign investors just hankering for more access to vietnamese markets. here, are wet's seeing that flows through from foreign investors? are they excited and are they snapping up these ipos? >> not yet. in one ipoestors are that we held so far this year. that might be so far because they don't think they know about these or there is not enough information about these companies. these tend to be smaller companies. sometimes the perspectives are not translated into english. they are only in jeopardy -- in vietnamese. want to waite they for a company that they know and trust, companies like vietnam airlines. it is expected that they will hold an ipo this year. although there is a question about a possible delay.
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ipo that ithe one think a lot of foreign investors are waiting for them perhaps might be a truer test of a foreign investor interest here in vietnam ipos. >> they have been waiting for that one for a while. a look at video streaming websites. they have been growing in china and elsewhere. but reports that the government is cracking down, particularly on foreign programs. thehese reports coming from ap and also the wall street journal, reporting that china is going to take a stricter stance on foreign content, foreign shows, specifically the u.s., that is broadcast online. so through stuff like sohu and y okutudo as well. china has not given any dreg details or information, unlike the biggest times i have taken a crackdown. >> what type of shows? theet's take a look at
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first one, which is "the big bang theory." a whole conspiracy on taking down a political government. i would just classified as a show to watch. "the good wife," registered watching it a week ago. many say perhaps the reason "the good wife" is under scrutiny because of sexual innuendo as well as the fact that the protagonist, one of the main protagonists, cheats on his wife. here's what you need to know. currently, china has stringent policies when it comes to u.s. releasing companies cinematic releases. so theaters and what you would watch on your typical tv set in your house. but the rules are a lot looser
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when it comes to online video consumption. so perhaps, chinese regulators are taking more of a strict right when it comes to regulating content. chinese websites have obtained licenses to these programs legally. >> how big a deal is this ultimately? >> in past recent years, a lot of these chinese websites have no longer been high reading shows. so people are paying for it. must of the time, consumption is free. viewership has increased. take a look at what "the new york times is reporting." market rose 42% last year and may rise 39% this year. online video networks can negotiate,
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consumers can watch online. they are per -- they are reporting that perhaps the chinese government will require the aggregators to change their business model and introduce a middleman. an agencyman will be supported by the chinese government that will associate between the online providers and the providers in china. next, our investors investors in-- are southeast asian countries setting themselves up for disappointment?
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>> welcome back. john, thanks for sticking around with us.
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think that is going to be any major change in the money supply. its expectations are being downgraded by bloomberg. there is a lesser chance of that happening. and that is interesting given the obvious impact we have seen on the consumption tax. >> do you think they need to come up with [indiscernible] >> i think it's likely. i don't think it will come up this month. maybe towards the summer. >> japan has the world's lowest yielding bonds. are we going to see more investors looking overseas in the next six months? >> [indiscernible]
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>> you have to say that, right? [laughter] >> the equation is very simple. if you're trying to beat the benchmark and the benchmark is going to be impacted by inflation of two percent, clearly, you will have to look outside with the boj trying desperately to keep up. we do expect more liquidity to start looking for better growth and learnings opportunities outside japan in the coming year. and to the extent typically fixed income [indiscernible] a higher premium. >> do you see japan moving from a phase or a year of relative certainty to uncertainty? >> that is a really good point. what we really need to remind ourselves is that period of time last year's when good news was bad news and bad news was good news in the united states. i think something similar will be in japan where bad news will
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be recorded -- will be rewarded. news is perhaps going to be punished because people say there's a less chance of them coming inside. >> a purple tie. >> a black-tie. releasing their outlook today, political uncertainty as it pertains to thailand, could it be that gdp growth this year's reduced it to buy five percent? when will it get its act together? 99% -- i don't know. if you asked 99% of people in thailand, they have a similar answer. >> the tourism story. >> i was contributing to the local economy. [laughter]
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think exports will pick up toward the latter part of the year. a fairly negative effect on growth in the near-term. ostensibly, a weaker dollar yen is quite supportive. >> million is so strong, you build overseas -- the yen is so strong, you build overseas. >> and the repatriation is maintaining some strength in the yen itself. >> where do you see the yen going? >> the technical guys are still of the view that the yen can go towards the 171 area. >> what about geopolitical risk? that is always a factor here. >> that is the date tell risk in
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the market -- the room -- that is the real tail risk in the market. europe seems to be on stabilizing somewhat. as you point out, the big risk is obviously stemming from areine and whether markets comfortable with that risk or complacent about that risk. i think we are going to find out. >> how much is priced in? >> a large part of the good news is priced in. very little of the negative is priced in. >> why can't get their export act together? japan? >> there has been a secular decline in japanese exports for quite some time. i don't think it is as simple as dollar yen at point a or plan b. there has been quite a large , bothing out of japan
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within asia, thailand, and right around the world. that tends to affect in terms of capital inflows at the entities quarter rather than perhaps aggressive export numbers on a month-on-month basis. >> what about your job? you have clients come around talking and you have to sell them a bond market recent nothing is going to happen. >> well, hang on. [laughter] week, justsay last taking one week, we had 1.5 -- $9.5 billion of bond issuance. >> that is pretty explicit. pretty exclusive. >> we have seen a record demand for asian fixed income. that is a consistent story year to date. >> insurance companies are. fixing their allocations. . who was juicy going that route? >> icy an extraordinary amount
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of appetite -- i see an extraordinary amount of appetite for income. clients are looking now for income -- juice to a large extent though. component of that corporate debt remains pretty attractive. we have seen a lot of demand. in the high-yield.. you have spreads over treasuries at. -- you have spreads over treasuries at 400 to 500. citi involved in indonesia a few months ago, that massive bond offering? what, $6 billion? amount ofs a huge interest, particularly in the
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philippines, indonesia, and sovereigns run across asia. by and large, they tend to come somewhat rich to comparable debt. to have an underweight position to sovereigns in our portfolio largely because of that. typically also, you see sovereign risk with a lot longer maturity. >> thanks for that. coming up next -- >> flexing its muscles and showing a clean pair of heels, the latest track star from -- >> sherry -- >> from chevy.
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>> gm has released its highly anticipated chevy camaro.
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>> mark steelers do a lot to -- cars fors engineering general motors. but he is better known as a guy who literally wrote the book on pro-touring, the art of restoring vintage vehicles with modern power and handling. >> a roller coaster ride. your job is like your hobby and your hobby is like your job. and did you take the same kind of approach when you did this camaro? >> yeah. 2014 z28 is the must
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track rated camaro every made. muscleevious high pulled cars, this focuses on handling and stands rather than cash and horsepowerer than alone. what are the highlights? ls seven engine is just a great motor. the nicele, got handling. it works really well. >> the z28 will come with a stick shift, proof that it was engineered by a true car guy, not a bean counter. kind of doing the last .xtreme performance variance i think about when i was a kid reading the motor trend, car and
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driver, the different articles about the z28. and now i am writing a history. this has been a dream come true. >> that is it from us here in asia. >> we will see you tomorrow.
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>> the following program is brought to you by the -- by supple. >> hello and welcome to the smart medicine show. we have a great show today. if you have pain or know someone who has pain, joint pain, back pain, bone pain, muscle pain or if you suffer from arthritis, astra


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